If at first you don’t succeed – try something else. That’s the pragmatic attitude being adopted by Cathal Friel, the corporate finance adviser who in 2012 decided to try his luck with oil and gas exploration minnow, Fastnet Oil & Gas.

Now Friel has thrown in the towel, proposing to shareholders that Fastnet, listed on AIM in London and RSM in Dublin, should abandon the sector altogether and focus instead on life sciences/biopharma investments.

In 2012, Friel teamed up with exploration veteran Paul Griffiths to establish Fastnet. The company floated at 11p per share and raised €12.5m on the back of exploration licences in the Celtic Sea and offshore Morocco.

In November 2012, Fastnet tapped the market for another €19m, this time at 22p per share. Much of that money was earmarked for carrying out a large scale 3D seismic survey of Fastnet’s licence acreage off the south coast of Ireland, and between March and September 2013 the company burned through €15m on exploration and evaluation expenses.

Fastnet executive chairman Cathal Friel

In Association with

In November 2013, Fastnet had another cash call, this time for €12m at 14p per share. The rationale was that the company needed cash in hand to meet its commitments in Morocco, even as talks were at an advanced stage with a farm-in partner.

That partner materialised in the form of South Korean company SK Innovation, which funded the drilling cost of Fastnet’s offshore play in Morocco in 2014. Executive chairman Friel had negotiated a great deal: the cost of Fastnet’s commitment to the exploration well was just $2.8m. If they’d been lucky, everything would be different now. But the drill didn’t work out and Fastnet’s biggest roll of the dice was over.

The business model for E&P minnows like Fastnet is to secure farm-in to the licence areas from larger players. The slide in oil and prices which started in Q3 2014 has put paid to that. With the oil price at $50 a barrel, it’s not worthwhile for oil majors to drill thousands of metres into the seabed.

Nil Value

Having raised €43m from investors in two years, Fastnet has €14m in cash left. The share has consistently traded at a discount to the company's cash balance (equating to 3p per share), implying that the market is attributing nil value to the Fastnet’s oil and gas exploration assets, which were valued at €32m in the December 2014 balance sheet.

Overheads have been cut. Paul Griffiths is long gone and finance director Will Holland, hired in May 2014, was let go seven months later. Carol Law, appointed CEO in January 2015, will depart the company with three months’ notice if shareholders agree Fastnet’s new departure at a meeting at the end of August.

The new game plan calls for Fastnet to exit its commitments in Morocco and the Celtic Sea. According to the company: “We have not been able to identify an M&A opportunity in the oil and gas sector which would create value for shareholders and be a suitable use of the company's available cash.

“The board believes that more value can be achieved for shareholders by utilising the company's existing listings on AIM and the ESM and applying the group's corporate infrastructure and cash resources to a new investing policy.

Biopharma Momentum

“The board believes that the healthcare industry, particularly the biopharma sector, is experiencing strong momentum and there exist significant M&A and value creation opportunities for both small cap and large cap companies. Furthermore the board believes that it has access to an international pipeline of such opportunities that could lead to value creation for the shareholders.”

“In line with the company's proposed fundamental change of business the board proposes that the name of the Company be changed to Fastnet Equity plc.”

The change in direction was sanctioned by shareholders on 28 August 2015, when the vote in favour was 99.9%. A new name was also adopted, Fastnet Equity plc.

Cathal Friel, non-executive chairman, commented: “The board is grateful for the support of the overwhelming majority of shareholders, many of whom have suffered from the malaise in the oil industry as have the board as significant Shareholders. The board will work tirelessly to source shareholder accretive deals for the company in the healthcare sector and looks forward to updating shareholders on progress in the months ahead.

“In terms of the company's Celtic Sea assets and 3D seismic survey data, the board will continue to examine all options to secure value for shareholders. Options under consideration include spinning the Celtic Sea assets into a stand-alone entity. This would enable any value creating opportunities from Celtic Sea assets to benefit our existing shareholders who would become shareholders in the newco.”